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The constrained CIO—case study 2—building the shiny town in the shadow of the old

Publish date:

Date iconJanuary 30, 2018

There are many companies with mature, large ERP systems, where CIOs still needs to up their game and win in the marketplace. The challenge: how to build a new application landscape in a digital environment.

Sometimes, you go to a meeting with a customer and you get some great alignment of thinking around how to extract value and drive forward exploitation of their application platform. At Capgemini, we’ve distilled it into the “Excel. Enhance. Innovate” paradigm of ADMnext and, for this customer, they were already with the program.

The company, let’s call them Supplier Inc., is a mature user of a large ERP platform but recognizes that it needs to continually up their game across a number of fronts to maintain their position in the market and retain its standing as an innovative IT team. Interestingly, the CIO used the analogy of the World Cup (probably RWC because Agile (Scrums!) is a big driver for them) to describe how they want the best players on their team, the best approaches, and wants to win consistently. Having that kind of drive and passion is a great starting point.

The challenge was how to build a new application landscape to support a digitally driven organization while still supporting and, to a limited extent, enhancing the legacy platforms. The existing constraints align very well with the 6 dimension model that we work with to recognize and address issues. They can be summarized as follows:

A complex legacy portfolio—Application/Infrastructure

The nature of the application used is that there are multiple components, across multiple servers, mostly on premise. The organization itself is quite complex and diverse and this has also added complexity. This landscape is delivering against business requirements, but as a platform for future innovation, the complexity can add inertia and the technical debt gets greater every time a change is made.

Methodologies designed for Systems of Record—Support/Project Processes

While the client is making great strides towards Agile and DevOps, success is restricted to pockets of excellence as opposed to a consistent approach across all areas. The majority of processes from funding, design, build all the way to master data changes are aligned to a traditional ERP mentality and so deliver change at the pace of the slowest application.

A fragmented 3rd party eco-system—Commercial, Support/Project Process

History and the drive to reduce cost have resulted in many partners supporting different parts of the application portfolio. The constraints are from a number of different perspectives:

Coordination—There is an overhead inherent in this scenario, with Supplier Inc. needing to have a larger-than-necessary, retained organization

Speed of change—Changes can impact multiple applications and so the engagement of multiple parties can slow down the change, and

Cost—Increased overhead leads to additional cost in addition to the inability to apply economies of scale by having a single supporting partnership.

Investment lock—Commercial

This is a constraint experienced by many CIOs where budget that could be freed up for transformational activities is used to support and sustain the legacy estate with minimal value being created for the business.

But, as I said, the meeting was a great discussion of how the modus operandi of Supplier Inc.’s IT team could change to address these, and other constraints, in order to keep winning and pushing the bar higher over the next four years. Many ideas were exchanged, but here are just three:

Simplification to EaaS—“Excel at the Core”

There is often a balance between complexity, flexibility, and cost. Increased flexibility, such as a component-based application, can result in higher complexity and, therefore, higher cost. Pulling the different levers often negatively impacts one of the others. Driving a consistent simplification strategy across the different constraint areas is often the best way to achieve a successful outcome.

Landscape migration to cloud, combined with application rationalization delivered through a simplified partner ecosystem, is a proven way to achieve improvements across all levers. The ultimate objective is to procure an “Everything-as-a-Service” platform that achieves this with a simplified commercial model.

n-Modal pace of change—“Enhance at speed”

While Gartner describes a bimodal approach to delivery, we agreed more on the need for an “n” or multimodal approach based on the risk associated with the relevant application. This risk association tends to align with the Gartner Pace Layering model, but provides more granularity.

The challenge is how to implement such an n-modal approach with effective governance but approaches exist and we are already starting the implementation with a number of clients.

Seed-funding to self-funding transformation—“Innovate 4 value”

In order to address investment lock, we are looking at areas where seed funding from partners can be used to effectively release value and kick-start transformation. Examples include offers from IaaS partners that free up cash, or small FoC pilots that deliver immediate value, innovation pots, or finance tools such as receivables funding. All can be creatively used to get the ball rolling and show a downward trend on costs with an upward trend on value.

So, in summary, while innovation may be seen more frequently in the area of digital platforms, it is great to see that the right attitude, coupled with clear vision, can address existing constraints to deliver value.

And finally, it’s worth remembering that a lot of value is tied up in legacy applications through things such as Big Data, integration, efficient business processes, etc. Lighting the spark and releasing it is a great enabler for business change.